L6 - Purchaser defences (cases)

Question 1

Peffer v Rigg (1977) (HC)

Answer 1

Main point: a purchaser w/ knowledge of an EI under a trust takes subject to it

Situation:
- P&D1 brought house in D1’s name, held on trust as TIC in equal shares, ag (later recorded in deed) to contribute equally to outgoings - mortgaged it to pay for works, divided into 2 flats (one let and one for D1’s MIL)
- D1’s wife D2 went to live w/ MIL, other flat became vacant and P wanted to sell whole house = stopped paying outgoings until decision reached - D1 re-let the flat without P’s knowledge + conveyed to D2 ‘beneficially’ for nominal consideration as pt of divorce proceedings

=> P sued D1 for breach of trust, D1 ag that all he transferred was his interest + re-letting not a breach (reasonable to meet outgoings) and D2 ag that didn’t know abt trust, P’s interest not on register and she was registered as RP so not bound

HC held :
- D re-letting not breach of trust bcs P’s refusal to meet expenses forced him to find another way to meet expenses -> decision to re-let top-floor flat = acting honestly and reasonably, ‘as prudently as he would have been likely to do in regard to his own affairs’ so not a breach of trust’
- D2 took subject to P’s interest bcs not a purchaser in good faith : she knew that house was held on trust (and also only nominal consideration) – also suggestion that she take on CT ?

Question 2

Lyus v Prowsa Developments (1982) (HC) (main point)

Answer 2

Main point: no registration defence where purchaser promises to give effect to an interest in purchase contract -> if undertakes new oblº, P holds on CT for interest holder

Question 3

Lyus v Prowsa Developments (1982) (HC) (summary)

Answer 3

P contracted w/ V dvp company to purchase plot of land and paid deposit, title to be conveyed to P once house built on plot – V went insolvent before house was completed, V’s bank (B) held mortgage charge over the land prior in date to P’s contract – B elected to sell land incl P’s plot to D1, contract provided that P’s plot was sold “subject to and with the benefit of” P’s contract – D1 then contracted to sell to D2, incl clause plot sold subject to P’s contract

=> HC held that D1 held plot on CT for P (bcs accepted land under ag w/ bank) and so did D2 – would be a ‘fraud’ for either of them to deny stipulation, and statute should not be used as an instrument of fraud so no registration defence

Question 4

Chaudary v Yavuz (2013) (CA)

Answer 4

Main point: use of right of way not enough for AO, and no CT where no new oblº undertaken (especially not where right = one that could/should be protected by registration)

Summary: D brought property adjacent to C’s, under standard terms of sale incl term stating that property was sold subject to ‘incumbrances’ discoverable on inspection – C trying to show that D bound by (equitable) right of way over metal staircase on D’s property, either bcs AO or CT as in Lyus v Prowsa

=> CA held in favour of D: mere use of staircase by C and tenants not enough for AO, and no CT bcs purchasing property subj to encumbrances discoverable on inspections ≠ undertaking a new obligation (as in Lyus v Prowsa) + right here was one which could’ve been protected by registration

Question 5

Midland Bank Ltd v Green (1981) (HL)

Answer 5

Main point: purchaser’s statutory defence doesn’t include requirement of good faith or that consideration be equivalent to mk value

Summary: Father (F) granted son (S) 10y option to purchase farm which S farmed as tenant – later F sold farm to mother (M) for small consideration bcs wanted to deprive S of the option, S sought to register the option and exercise it

=> HL held in favour of M : M was purchaser for value of registered estate so unregistered option was void against her – nothing in the statute imposing requirement of good faith or that consideration must be equivalent to market value

Question 6

Williams and Glyn’s Bank Ltd v Boland (1981) (HL)

Answer 6

H = RP of matrimonial home, W had contributed substantial sum to purchase => H held on trust for himself and W as TIC, H mortgaged house to bank (made no enquiries abt W), and defaulted, bank sought possession

=> HL held that wife in actual occupation (within meaning of s70(1)(g) LRA 1925)  equitable rights as TIC protected by reason of her occupation = made her interest overriding => binding on the bank (bcs had only been dealing w/ one trustee = H)

Question 7

Williams and Glyn’s Bank Ltd v Boland (1981) (HL) (Lord Wilberforce on AO)

Answer 7

• “ordinary words of plain English” : occupation = ‘presence on the land’ + word ‘actual’ “merely emphasises that what is required is physical presence, not some entitlement in law”
• here: W was physically present + had all the rights occupiers normally have, incl “the right to exclude all others except those having similar rights” = AO
• no need for occupation to be inconsistent w/ title of vendor – possible for V and others to be in AO at the same time, AO doesn’t have to be exclusive occupation

Question 8

Lloyds Bank Plc v Rosset (1989) (CA) (main point)

Answer 8

/!\ reversed on other grounds

main point: employing builders to mend a semi-derelict house + physical presence helping with / supervising the works = enough for actual occupation, even though not living there yet

Question 9

Lloyds Bank Plc v Rosset (1989) (CA) (summary)

Answer 9

H&W arranged to purcahse semi-derelict property from V, who authorised them to enter property w/ builders to undertake renovations before completion – builders began work a month before completion, W contributed to the work + was there almost every day to help & supervise – purchase money supposed to come from H’s family trust, but without W’s knowledge H mortgaged the house and used mortgage money instead – later (after family had moved in), H left and defaulted

=> CA held that semi-derelict property in principle capable of AO – active and substantial renovation, during which builder was present as agent for occupier = enough for AO here, as was wife’s daily presence contributing to the renovation

Question 10

Chaudary v Yavuz (2013) (CA) (main point abt AO)

Answer 10

exercise of an easement (right of way) not AO of servient land so not an overriding interest

Question 11

Link Lending Ltd v Bustard (2010) (CA)

Answer 11

Main point: possible to be in AO even if not personally present at time of purchase – 5 relevant factors listed to determine whether absent person in AO

Summary: Ms B (suffering from serious psychiatric condition) tricked into transferring registered title to her house to H – H mortgaged to LL and defaulted – at time mortgage was granted, B had been absent from the property for over a y bcs in psychiatric care

=> CA upheld judge’s finding that Mrs B was still in AO (based ntb on intention to occupy and visits when allowed) + listed relevant factors (5): length of absence and reason for it, nature of property, intention to return, degree of permanence and continuity of presence of person concerned, personal circumstances of that person

Question 12

Malory v Cheshire Homes (2002) (CA) - Arden LJ on AO of uninhabitable land

Answer 12

Main point: eg of what might constitute occupation of derelict / uninhabitable land

[81] “The requisite physical presence must […] in fairness be such as to put a person inspecting the land on notice that there was some person in occupation”

[82] Relevant acts : boarding up windows, fencing, or otherwise controlling access (eg padlocking gate), also using land for storage

Question 13

Williams and Glyn’s Bank v Boland (1981) (HL) - on overreaching

Answer 13

Main point : no overreaching bcs bank dealt only w/ 1T = Mr B

Question 14

City of London BS v Flegg (1988) (HL)

Answer 14

Main point : disposition (incl charge by way of legal mortgage) by two or more trustees or a trust corporation overreaches any BI in the land (under s2(2) LPA 1925)

Summary: married couple + wife’s parents (Ds) purchased house, registered in names of couple but Ds contributed to purchase price => house held on trust by couple for all 4 as TIC – couple remortgaged the house without knowledge of Ds, and defaulted, BS sought possession

=> HL held in favour of BS : D’s BI in the property had been overreached (bcs BS dealt w/ 2 Ts ≠ Boland)

Question 15

Abbey National BS v Cann (1991) (HL) (main point)

Answer 15

Main point: where mortgage provides money necessary for purchase of house, completion of sale & execution of charge = one single transaction, no point in time where buyer has title to the house free of mortgage charge

Question 16

Abbey National BS v Cann (1991) (HL) (summary)

Answer 16

D1 purchased house for his mother D2 (and future husband D3), using money from mortgage granted by P – mother contributed to purchase price, when D1 defaulted, and P sought possession ag that she had an EI binding on the bank – M had moved in abt 30 min before purchase and charge completed

=> HL held in favour of BS : where a purchaser relies on a mortgage to acquire a legal estate, granting of a charge and acquisition of the estate = one single indivisible transaction : no ‘scintilla temporis’ during which D1 had legal estate free of charge, out of which D2 could get interest w/ priority

=> Relevant date for determining existence of an overriding interest due to AO = date of registration rather than date of creation / transfer of the estate

BUT to establish claim to overriding interest by virtue of AO, person claiming OI must have been in AO at time of creation or transfer as well

Question 17

Abbey National BS v Cann (1991) (HL) (on AO)

Answer 17

while AO “does not necessarily involve the physical presence of the person claiming to occupy, it does involve some degree of permanence and continuity”  merely bringing boxes and furniture in (as D1 and D3 did for D2 here) not enough, only preparatory steps for D2 to begin AO later

Question 18

Abbey National BS v Cann (1991) (HL) (Lord Oliver quote on AO)

Answer 18

“’occupation’ us a concept which may have different connotations according to the nature and purpose of the property which is claimed to be occupied. It does not necessarily […] involve the personal presence of the person claiming to occupy. A caretaker or the representative of a company can occupy […] on behalf of his employer. On the other hand it does […] involve some degree of permanence and continuity, which would rule out mere fleeting presence”

Question 19

Bristol and West BS v Henning (1985) (CA)

Answer 19

D1 & D2 = cohabiting couple w/ children, D1 brought house w/ mortgage from BS = C, conveyance in D1’s named but D2 did lots of wk on the house (incl building & decoration), some intention that D2 get ½ BI but nothing in writing – D1 left and defaulted, BS sought possession

=> CA held in favour of BS: Ds didn’t declare any trust in writing or reach any express ag abt BI + not enough evidence of intention for CICT so D2 didn’t have any EI capable of taking priority over bank’s charge

Question 20

Equity and Law Home Loans v Prestidge (1992) (CA)

Answer 20

Main point: person w/ EI in property can be deemed to impliedly consent to a re-mortgage of it insofar as the 2nd mortgage is used to repay the 1st (//simply borrowing on better terms)

Summary: D1&D2 (unmarried couple) brought a house, registered in D1’s name but D2 contributed to purchase price, balance raised by mortgage – D1 later re-mortgaged without D2’s knowledge, used pt of money to repay 1st mortgage and remainder for himself, left and defaulted, bank sought possº

=> CA held in favour of bank bcs D2 could be taken to have impliedly consented to 2nd mortgage so far as used to repay the 1st – otherwise, D2 would get unjustified windfall (removal of 1st mortgage to which she did consent) – // D2 simply re-mortgaging to obtain better terms

Question 21

Baker v Craggs (2018) (CA)

Answer 21

Main point: overreaching only applies to transfer of estates in land – doesn’t apply to grant of an easement => grant of an easement, even by 2Ts not capable of overreaching EI in land

Summary: Vs sold plot of land to D, registration of transaction delayed – during delay, Vs sold another plot to C and purported to grant C right of way over D’s land (which Vs held on trust pending registration) – C’s title (incl easement) registered before D’s => C ag that D bound by easement bcs D’s EI overreached when C paid 2Ts = Vs, could attach to money C paid

=> CA held in favour of D : overreaching did not apply to grant of easement bcs not an estate in land + D did not have an equitable easement in the land he purchased which could attach to the money paid

Question 22

Scott v Southern Pacific Mortgages (2014) (SC)

Answer 22

Main point: to be overriding, interest of person in AO must be proprietary / capable of binding 3Ps - someone who does not yet have title, only benefit of estate contract, cannot grant proprietary interests

Summary : Mrs S sold her registered title to P, who ag to lease house back to her (for life), P funded purchase by mortgaging to SPM - issue = whether Mrs S’s interest binding on SPM

=> SC held in favour of SPM : before conveyance, P only had estate contract so could only grant personal rights to Mrs S - and bcs mortgage funding purchase of the house, SPM charge = same transaction as conveyance, Mrs S’s proprietary right could only arise after it

Question 23

Paddington BS v Mendelsohn (1985) (CA)

Answer 23

Priority contest btw B under trust in occ who knew mortgage advance needed to purchase property and BS which had granted the mortgage

=> CA held that B had impliedly consented to the mortgage, bcs possibility of acquiring an interest in the property was dependant on that mortgage